I am describing a federal criminal prosecution I was involved with many years ago. I was innocent.

As my securities career grew, I decided to become an industry arbitrator. I had been on a committee of 3 where we listened to clients discuss their claims against their brokers. That was the essence of a typical case. A lot of securities arbitration cases hinged on whether the broker was doing the best for the client given a set of assumptions that the client provides including risk, time lines, etc…If the broker didn’t have all the information to make recommendations, shame on him/her. If the broker had all the information, but the client changed his/her mind, shame on the client. Signed, written disclosure is the key.

Our written disclosures were substantial and nowhere to be found because about 5 months before I was charged, the Fund’s trustee that had been recently talking with the prosecutors (records documented their meeting) asked for the Judge to destroy original business records from the Fund at issue. The Motion to Destroy the Fund’s original business records described the documents as “burdensome”.

Arbitration – continued, Supply Justice

Now, we sit with a more-than-disgruntled investor in arbitration with one hand tied behind our back because we were convicted of a crime we didn’t commit and we couldn’t produce original business records. Dandy.

As much as I wanted the truth to come out about this specific investor, my role, and the known risk that his client took, I wanted justice in the criminal case much more. These co-defendants that were part of the Government’s team to convict me were now on the same team to defend their actions alongside me. I wanted them to admit it. Admit the truth. Admit that there was never any conspiracy to do anything ever to deceive any investor. Not that anyone on the committee should ever mislead an investor, but the document was written like that. The written document said that you can’t/shouldn’t listen to someone if they say something contrary to what they agreed to in writing.

I was not an attorney and not represented by one at the arbitration, but I had very specific questions that I wrote down that I would ask if someone didn’t get to John, Scott, and Tom sooner. The constant drama in the Federal courthouse was not the same air that was in the arbitration conference room.

Again, the facts don’t change.

I was prepared to ask, “Were you part of a conspiracy with other Fund Committee members?” If so, who and what was it? I knew I was never part of any conspiracy. I wanted to see if these 3 former Government cooperating witnesses would change their tune.

I was prepared to ask, “What did you tell your client about the investment risk, and what would be done with their investment?” I was the compliance manager. I had notes and signed documents from the annual compliance meeting as to what a broker should have said.

I did ask questions and they did answer. My co-defendant’s attorneys asked some of the same or similar questions and the answers were…..much different than their Government testimony.

Arbitration – continued, Supply Justice

The Government’s words about facts being confusing sure did play out at my arbitration. Likewise, Scott’s comment about remembering things that are convenient was bubbling up all over the place. What was convenient at trial was to do what the Government said. Now that the Government case was in the rearview mirror, it was convenient to defend himself which was the truth and helpful to my criminal case.

At the criminal trial, many times a Government defendant would not say anything if they were answering something true and helpful to the defense, much like they were deaf. A nod, grunt, or some form of affirmation would be all we got and certainly no explanation to indulge us. At the arbitration, these same co-defendants spoke up and said they weren’t part of a conspiracy and maybe didn’t do the best job informing their client, but it wasn’t intentional and they didn’t benefit from it. Music to my ears.

I looked forward to each day of arbitration because while the Government’s criminal case had often been one lie or innuendo compounded by another, the arbitration was often, just the opposite. Even though the criminal trial was over, sworn testimony from the arbitration could be extremely useful in potential “next steps” to undoing my Federal court case’s guilty verdict.

One of the things that became obvious during the criminal trial was that every time the Government was victorious, it became more of an uphill battle to undo decisions even if others knew they were wrong. No going back. We had been denied a Motion to Dismiss because of original business records being destroyed with the Government’s knowledge because the Government didn’t have possession of them. We had been denied a Motion to Dismiss because a key Government witness lied to the Grand Jury to get us charged, but it would be impossible to extract his testimony from the rest of the proceedings.

Arbitration was different. These sworn statements by the primary Government witnesses were fundamental to the essence of our case and too big to ignore. Clearly, there was no intent, no conspiracy, and I never received any monetary benefit beyond my normal salary. There was no crime.


Is there ever a time that a lie is really worth it?

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